A QDRO is a legal document or a provision included in another legal document such as a divorce-related property settlement or divorce decree. The QDRO establishes the right of a former spouse (also known as the alternate payee) to receive all or part of the other former spouse's qualified retirement plan benefits and pay the income taxes on those benefits. In other words, "he who gets, pays."
A QDRO is required to meet specific requirements set forth in Internal Revenue Code Section 414(d). Until the Hawkins decision the Internal Revenue Service had been successful in claiming that a failure to follow the statutory requirements to the letter resulted in the participant former spouse being taxed on a constructive distribution from the plan, which is than deemed given to the alternate payee. In other words, the alternate payee gets the cash, while the former spouse gets the tax liability.
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For more information, contact the Family Law Offices of Renee M. Marcelle at (415) 456-4444, or online at http://www.familylawmarin.com/--